If the Treasury is unwilling to stretch the definition of extraordinary measures, on the day that the Federal Reserve predicts that the Treasury will run out of cash in its account and the Treasury is bound by the debt ceiling, it suspends all payments and awaits instructions from the Treasury. As a result, the government’s principal economic officials will face the prospect of violating one of these three laws:

1. The Second Liberty Bond Act of 1917 that establishes the debt ceiling;

2. The Federal Reserve Act that prohibits the Fed from lending directly to the Treasury; or,

3. The 14th Amendment of the Constitution that holds that the debt of the United States government, lawfully issued, will not be questioned.

They have to break a law. At the end of the day, officials will avoid violating the Constitution by indicating that they have been given inconsistent instructions and are obeying the one with the most important precedent.

1. It's not against the law to not increase the debt ceiling. All the Second Liberty Act of 1917 does it allows the debt ceiling to exist, along with the power that grants Congress raise (or not raise) it. Also it allows the Congress to set the range in maturity, date, interest, etc.

2. Nothing changes regarding the Federal Reserve if the debt ceiling is breached. The Federal Reserve still must engage in OMO in order to purchase Treasuries.

3. Section 4 of the 14 Amendment has nothing to do with the debt ceiling... At all.

Cigar

10-07-2013, 01:28 PM

1. It's not against the law to not increase the debt ceiling. All the Second Liberty Act of 1917 does it allows the debt ceiling to exist, along with the power that grants Congress raise (or not raise) the it. Also it allows the Congress to set the range in maturity, date, interest, etc.

2. Nothing changes regarding the Federal Reserve if the debt ceiling is breached. The Federal Reserve still must engage in OMO in order to purchase Treasuries.

3. Section 4 of the 14 Amendment has nothing to do with the debt ceiling... At all.

Once again, if you have a problem with the people at Business Insider, take it up with them.

I'm sure you're far brighter that anyone there.

AmazonTania

10-07-2013, 01:32 PM

So your excuse for passing along faulty/inaccurate information is that you are willfully ignorant and are just posting whatever you read without vetting the information simply because it sounds good to you...

That's... not surprising.

Peter1469

10-07-2013, 02:25 PM

Once again, if you have a problem with the people at Business Insider, take it up with them.